Coke: Buy 1 Rival, Get Our Brand Free

NEW YORK (AdAge.com) -- In an audacious and quite possibly unprecedented move likely to resonate with recession-weary consumers, Coca-Cola will give away a free sample of its Vault brand to anyone who buys PepsiCo's Mtn Dew.

The aggressive "Don't Dew It" promotion aims to get die-hard Dew-ers to try Vault, which after three years on the market isn't just an also-ran to the Pepsi brand; it's an afterthought. According to Beverage Digest, juggernaut Mtn Dew commands more than an 80% share of the citrus segment, while Vault holds about 4%.

Coke is offering a free Vault to Mtn Dew drinkers.
But being No. 2 doesn't sit well with Coca-Cola, which believes if it can get consumers to taste Vault, they'll convert. "Simply put, it's designed to drive Vault consideration and recruitment among Dew drinkers," said Scott Williamson, a Coca-Cola spokesman. "We believe that when Dew consumers are offered the opportunity that they'll like Vault better."

It doesn't hurt that the product will be given away for free, a tactic that has garnered goodwill and delivered significant return on investment for marketers including Starbucks, Dunkin' Donuts and Taco Bell.

Free with purchase
Via Coca-Cola's promotion, consumers can get a 16-ounce, 20-ounce or 24-ounce Vault free with any purchase of a 20-ounce Mtn Dew. The offer, billed as the "Vault Taste Challenge," encourages consumers to "Try Vault, with 30% more kick than Dew and a bold citrus taste." The coupon is good through late July.

"It's not the largest Vault promo ever, but it's significant for the brand," Mr. Williamson said. Coca-Cola declined to comment on the number of coupons being distributed or the overall cost of the program, but industry experts say the price tag will easily be in the millions.

"It's going to be mighty expensive," said David Diamond, a marketing consultant and former Catalina Marketing executive. "But as a way to leverage for increased distribution of Vault, it strikes me as very, very smart."

Another executive in the promotions business called the deal "unusual" and "unique," noting that it would be too expensive for most other package-goods companies. "Coupons are in vogue, and any time a consumer can buy a product and get another product free, especially with something that is so rapidly consumed, it is a significant value."

Thanks to the recession, coupon-redemption rates are on the rise, jumping 10% in the fourth quarter after years of declines. Experts estimate redemption of the Vault coupons could reach as high as 40%.

Still strong
Mtn Dew and Diet Mtn Dew are the only brands that managed to hold their own in the beleaguered carbonated-soft-drink category last year. Both Mtn Dew and Diet Mtn Dew gained 0.2% share in the category. Diet Dew also managed to increase volume 3.7%, the only brand in the top 10 to do so, according to Beverage Digest's take-home data, which excludes Walmart.

As for the company that invented the Pepsi Challenge, it's unfazed by Coke's move. "Many companies have challenged Mtn Dew over time, whether it was Surge or Mello Yellow and now Vault," said Frank Cooper, Pepsi's VP-portfolio brands. "What we're seeing now is a last-ditch effort to propel Vault forward in the face of Mtn Dew growth. It's an interesting tactic, but I think that the Mtn Dew consumer understands that the Mtn Dew product experience is unique."

Vault's play might be well-timed. It comes amid a name and design change for Mtn Dew that is proving unpopular with some consumers, who have expressed confusion, saying the new packaging makes the brand look like a knockoff. Those are, to some extent, the same criticisms that last month felled the Tropicana redesign. Peter Arnell, principal of Arnell Group, handled the redesign on both brands, along with redesigns across the PepsiCo portfolio.

"There's always a concern that when you make changes, particularly fundamental changes, that you can alienate the base," Mr. Cooper said. "But because we maintain a pretty constant communication channel with this consumer, we feel comfortable about making whatever adjustments are necessary."

Still, Mr. Cooper downplayed the design change, calling it "incidental," though complementary, to the brand's overall efforts. Those efforts include heavy involvement in the gaming space, with an upcoming "World of Warcraft" partnership, and a strong digital presence.

Bank on more promos like Vault's

Five reasons why, in this economy, we'll see more pushes like this.

Coupon redemption rates jumped 10% in the fourth quarter; 94% of consumers now say they use coupons.

Enticing cash-strapped consumers with discounts and free products is some marketers' best shot at taking share.

As sales slow, growing share is becoming tougher than stealing it.

Coupons offer value without permanently eroding price points.

There are more options for coupon distribution, including social media and downloadable coupons, that appeal to a young audience yet eliminate some of the cost for marketers.

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Natalie Zmuda

Natalie Zmuda oversees the CMO Strategy section and is responsible for identifying and analyzing the latest trends impacting chief marketers. Natalie also covers the retail and non-alcoholic beverage categories. She joined Advertising Age in 2008, following five years covering the retail and fashion industries for Conde Nast Publications.